Pending Money Laundering Cases: Bombay High Court Says Collective Responsibility Of Probe Agencies, Defence Counsel To Make System Work

Justice SM Modak added that Registrar General may also seek necessary directions from the Chief Justice in order to mitigate problems faced by the prosecuting agency as well as by under trial prisoners. "It may happen that due to intervention of learned Registrar General, the City Civil Court administration may be boosted to deal with huge pendency for scheduled and PMLA offence", the court remarked.

The court also highlighted the shared responsibilities of investigating agencies, courts, and defence counsels in ensuring efficient case management and emphasized the need for collective efforts to expedite trials.

“there is also onerous responsibility on the prosecuting Agency by remaining vigilant. If their case is not progressed (due to pendency), they are not remediless. They can request the head of that establishment (i.e. Principal Judge) to assign the case to another Court. Ultimately, running of a system is collective responsibility. The defense Counsels have also a role to play. On one hand, they have got every right to protect the interest of their clients and at the same time, they have to come forward for early disposal of the case. Because, they are also part and parcel of the system. And the system must work. Defence Counsels are also part of the same Society for betterment of which system is created. Unfortunately, nothing has happened of the sort mentioned above”

The court made these observations while granting bail to HDIL Promoters Rakesh and Sarang Wadhawan in a money laundering case arising out of the Punjab and Maharashtra Co-operative Bank Limited (PMC Bank) loan fraud case.

The Wadhawans are accused of offenses under Sections 420, 467, 471, and 120-B of the IPC, stemming from transactions involving Housing Development and Infrastructure Limited (HDIL) and the PMC Bank. Allegedly, the accused fraudulently obtained and defaulted on loans totalling Rs.6117.93 Crores from PMC Bank, with the principal amounting to Rs. 2540.92 Crores and interest Rs. 3577.01 Crores, between 2008 and 2019.

Following their arrest on October 17, 2019, the ED filed a complaint for money laundering under Section 3 read with Section 4 of the PMLA before the Special Court – PMLA – Greater Mumbai on December 16, 2019. The Wadhawans applied for regular bail before the Special Court, which was rejected on October 4, 2023, prompting them to approach the Bombay High Court.

The High Court reviewed various orders passed by the Special Court, including the rejection of bail under Section 436-A of the CrPC and orders on procedural matters raised before it. These orders shed light on the timeline of events in the case, including the filing of complaints, bail applications, and directions regarding the health and facilities of the accused in jail.

The Special Judge, in an order dated October 4, 2023, had detailed the filing of complaints, ongoing investigation, and the accused's conduct, ultimately concluding that the Applicants were responsible for delays in the trial.

However, the High Court observed that the Special Judge did not elaborate on how the three years of delay occurred or attribute specific reasons for adjournments. It emphasized that actions taken by both parties, such as seeking facilities in jail, addressing health concerns, and filing bail applications, are legitimate exercises of their rights under the law and should not be labelled as delaying tactics without evidence of malice from the Enforcement Department.

“All these steps and actions cannot be labelled as steps or actions taken for delaying the trial. The ultimate outcome may be delay of trial but unless some malafide is shown by the Enforcement Department, one can't label them as steps undertaken for delaying the conduct of the trial. These steps are taken by both the sides in legitimate exercise of their rights recognized to them by existing law.”

The High Court noted that while serious allegations existed, bail could not be denied solely on this basis.

The High Court noted that while trials for both the scheduled offence and types of offenses can proceed simultaneously, there is uncertainty regarding when the trial for PMLA offenses will commence and conclude.

The High Court directed the Registrar General to obtain a report from the trial court regarding the pendency of both PMLA and scheduled offense cases, the staff involved in scrutinizing case papers, and the expected trial commencement timeline. While the court opted not to place the data on record, upon reviewing the statistics, the court opined that it is apparent that the trial's future is uncertain.

Considering the uncertainty surrounding the trial timeline and the absence of assurances from the investigating agencies regarding timely completion, the High Court opined that there was no justification for detaining the applicants in jail indefinitely.

Ultimately, the court granted bail to the Wadhawans, requiring them to furnish a personal bond and surety bond of Rs. 5,00,000 each.

Case no. – Criminal Bail Application No. 3377 of 2023

Case Title – Sarang Wadhawan v. Directorate of Enforcement